Atmos Energy Corporation · NYSE:ATO
Atmos Energy — FY2023 Earnings Presentation
37 slides from Atmos Energy's earnings presentation, Nov 9, 2023
Slide 1: Analyst Call to Review Fiscal 2023 Financial Results & Fiscal 2024–2028 Outlook
Analyst Call to Review Fiscal 2023 Financial Results & Fiscal 2024 – 2028 Outlook November 9, 2023 10:00 a.m. Eastern
Slide 2: Fiscal 2023 Review
Fiscal 2023 Review As of November 8, 2023 Page 2
Slide 3: Fiscal 2023 Financial Performance Highlights
Fiscal 2023 Financial Performance Fiscal 2023 Highlights • Financial Performance • YTD Diluted EPS of $6.10; 21st consecutive year of EPS growth • $2.8 billion in capital spending; 85% allocated to safety and reliability spending • 8.8% increase in fiscal 2023 annual dividend to $2.96 per diluted sh
Slide 4: Segment Operating Income Highlights, Twelve Months
Fiscal 2023 Financial Performance Segment Operating Income Highlights Twelve Months Ended September 30 2023 2022 Change ($millions) Distribution $ 692.6 $ 604.6 $ 88.0 Pipeline & Storage 374.5 316.4 58.1 Operating Income $ 1,067.1 $ 921.0 $ 146.1 Distribution Key Drivers Pipeline & Storage Key Drive
Slide 5: Consolidated Financial Highlights
Fiscal 2023 Financial Performance Consolidated Financial Highlights Three Months Ended Twelve Months Ended September 30 September 30 Segment Net Income 2023 2022 2023 2022 ($millions, except EPS) Distribution $ 38 $ 16 $ 580 $ 522 Pipeline & Storage 81 56 306 252 Net Income $ 119 $ 72 $ 886 $ 774 Di
Slide 6: Segment Operating Income Highlights, Three Months
Fiscal 2023 Financial Performance Segment Operating Income Highlights Three Months Ended September 30 2023 2022 Change ($millions) Distribution $ 53.9 $ 36.7 $ 17.2 Pipeline & Storage 100.2 68.7 31.5 Operating Income $ 154.1 $ 105.4 $ 48.7 Distribution Key Drivers Pipeline & Storage Key Drivers • $2
Slide 7: Capital Spending Highlights
Fiscal 2023 Financial Performance Capital Spending Highlights $millions Fiscal 2023 YTD Capital Spending Repair and replace transmission and distribution $ 1,258 pipelines 325 Fortifications 2% 270 Service line replacement 13% Install & replace measurement & regulating 85% 249 equipment 226 Pipeline
Slide 8: Financing Highlights
Fiscal 2023 Financial Performance Financing Highlights • $800 million of long-term debt financing issued • $500 million 5.75% 30-year senior notes issued in October 20221 • $300 million 5.45% 10-year senior notes issued in October 2022 • Equity needs satisfied through our ATM program • $496.5 millio
Slide 9: Strong Financial Foundation Supports Capital Spending Program
Fiscal 2023 Financial Performance Strong Financial Foundation Supports Capital Spending Program Capitalization and Liquidity Profile Total Capitalization 100% 1% 1% Liquidity Profile as of September 30, 2023 $3,500 37% 45% $3,000 75% $15 $467 $2,500 $100 $2.7 billion 50% $2,000 $900 Available Liquid
Slide 10: Manageable Debt Maturity Schedule Supports Capital Spending Program
Fiscal 2023 Financial Performance Manageable Debt Maturity Schedule Supports Capital Spending Program Weighted Average Maturity ~18.41 Years1 $1,100 4.168% $950 3.73% $750 4.125% $600 $600 1.50% 4.30% $500 $500 $500 $500 3.00% 2.625% 4.15% 6.20% $400 $400 5.90% 5.50% $300 5.45% $200 $150 5.95% 6.75%
Slide 11: Strong Investment Grade Ratings Support Affordable Customer Bills
Fiscal 2023 Financial Performance Strong Investment Grade Ratings Support Affordable Customer Bills Strong Investment Weighted Average Cost of Debt Grade Credit Ratings $8,000 5.0 Standard & Moody’s Poor’s 4.5 $7,000 4.2 Senior Unsecured A1 A- 4.1 4.0 4.0 3.8 4.0 Commercial Paper P-1 A-2 $6,000 3.5
Slide 12: Fiscal 2024-2028 Financial Outlook
Fiscal 2024-2028 Financial Outlook As of November 8, 2023 Page 12
Slide 13: Leading Natural Gas Delivery Platform
Leading Natural Gas Delivery Platform Eight-state distribution territory Business Mix Intrastate pipeline system ~34% Pipeline & Storage ~66% Distribution 2024 Estimated Net Income Favorably positioned pipeline spans Diversified LDC platform in 8 states Texas shale gas supply basins • Largest pure-p
Slide 14: Safety Driven, Organic Growth Strategy
Safety Driven, Organic Growth Strategy Constructive Regulatory Mechanisms Support Efficient Conversion of Safety and Reliability Investments into Financial Results ~ $17 billion in capital investment Constructive rate mechanisms 6% - 8% Consolidated EPS through 2028; >82% allocated to that reduce re
Slide 15: Constructive Regulation Focused on Safety and Reliability
Constructive Regulation Focused on Safety and Reliability ~90% of Annual Capital Spend Begins to Earn Within Six Months Regulatory Mechanisms Recovery Method Service Territory Detail CapEx Deferral/ Rate Base1 Annual General 2024E Jurisdiction Infrastructure Forward- Meters (000s) % of Filing Case (
Slide 16: Financial Outlook: Five Year Plan Key Themes
Financial Outlook FY 2024 Five Year Plan Key Themes • Plan drives 6.0% - 8.0% annual EPS growth through FY 2028 • FY 2024 Guidance of $6.45 - $6.65; Midpoint of range implies 7.4% Earnings and growth Dividends Per • FY 2028 guidance of $8.35 - $8.75 Share • $3.22 Indicated Dividend for FY 2024; 8.8%
Slide 17: Fiscal 2024E Guidance
Financial Outlook Fiscal 2024E Guidance ($millions, except EPS) FY 2023 FY 2024E1 Distribution $ 580 $ 645 - 665 Pipeline & Storage 306 340 - 350 Total Net Income $ 886 $ 985 - 1,015 Average Diluted Shares 145.2 152 - 154 Diluted EPS2 $ 6.10 $ 6.45 - 6.65 Capital Spending $ 2,806 $ ~2,900 1. Changes
Slide 18: Fiscal 2024E Guidance: Selected Expenses
Financial Outlook Fiscal 2024E Guidance Selected Expenses FY 2023 FY 2024E1 ($millions) O&M $ 765 $ 780 - 800 D&A $ 604 $ 685 - 695 Interest $ 137 $ 190 - 196 Income Tax $ 114 $ 165 -180 Effective Tax Rate 11.4% 14% - 16%2 1. Changes in events or other circumstances that the Company cannot currently
Slide 19: Capital Spending Focused on System Modernization and Growth
Financial Outlook Capital Spending Focused on System Modernization and Growth Consolidated 2024E Capital Expenditures of ~$2.9 billion $4,500 $4,000 $3,500 $3,000 $ millions $2,500 $2,000 $1,500 $1,000 $500 $0 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024E FY2025E FY2026E FY2
Slide 20: Capital Spending Drives Rate Base Growth
Financial Outlook Capital Spending Drives Rate Base Growth Enhancing System Safety and Reliability1 $35,000 $28.0B- $30,000 $30.0B $25,000 $20,000 $ millions $16.6B $15,000 $14.1B $10,000 $5,000 $0 FY2015 FY2016 FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024E FY2025E FY2026E FY2027E FY2028E
Slide 21: Sustainable Financial Performance Supports Sustained Dividend Increases
Financial Outlook Sustainable Financial Performance Supports Sustained Dividend Increases 40 Consecutive Years* of Dividend Increases $3.50 $3.22E $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 • Indicated dividend increase of 8.8% for Fiscal 2024 *Fiscal year Note: Amounts are adjusted for mergers and a
Slide 22: Residential use of natural gas remains competitive
Sustainability Integrated Into Strategy Residential use of natural gas remains competitive Average Monthly Customer Bill Key Assumptions $120 • Normal weather and consumption $98 • ~$17 billion of CAPEX $100 spending through 2028 • Commodity pricing $80 • FY 24-28: $3.00 to $4.00 $71 • Delivery cost
Slide 23: Natural Gas Price Advantage Over Electricity
Sustainability Integrated Into Strategy Natural Gas Price Advantage Over Electricity Electricity1 vs Natural Gas2 - kWh Equivalent 15 14.20 14.44 14.19 13.74 13.45 12.42 12.26 11.54 10 6.20 6.12 5.89 5.10 4.96 5 4.37 4.51 3.86 0 Colorado Kansas Kentucky Louisiana Mississippi Tennessee Texas Virginia
Slide 24: Residential Natural Gas Bills Remain the Lowest Monthly Utility Bill
Sustainability Integrated Into Strategy Residential Natural Gas Bills Remain the Lowest Monthly Utility Bill Water2 Cable & Internet3 $111 $118 CO KS KY TN LA Natural Gas1 $71 Electric4 Mobile Phone5 $127 $134 1. FY2023 Atmos Energy enterprise-wide average monthly residential bill 2. Statista (https
Slide 25: Regulatory Information
Regulatory Information As of November 8, 2023 Page 25
Slide 26: Regulatory Highlights
FY 2023 Financial Performance Regulatory Highlights Approved Annualized Key Rate Activity Operating Income Increases1 Through November 8, 2023 $350 • $112.5MM Completed • $ 98.6MM – Mid-Tex Cities RRM $300 • $ 8.6MM – West Texas Cities RRM • $ 2.9MM – Kentucky PRP $250 • $ 1.8MM – Kansas GSRS $200 •
Slide 27: Regulatory Mechanisms To Support Recovery
Regulatory Mechanisms To Support Recovery Annual Revenue and Lag Revenue Stability and Lag Mechanisms Mechanisms Pension and Annual Rate Bad Debt in Jurisdiction Infrastructure Retirement Cost WNA Stabilization GCA Trackers Colorado x x Kansas x x x x Kentucky x x x Tennessee x x x x x Virginia x x
Slide 28: Key Regulatory Filings – Fiscal 2024E
Key Regulatory Filings – Fiscal 2024E Rate Filing Planned Timing Q1 Q2 Q3 Q4 October – December January – March April – June July – September Mid-Tex Dallas – Anticipate filing Dallas Mid-Tex and WTX Cities – Anticipate filing Mississippi – Anticipate Stable Rate Filing Mid-Tex and WTX Cities – Impl
Slide 29: Regulatory Summary
Regulatory Summary Effective Date of Authorized Requested Authorized Requested Authorized Requested Authorized Requested Requested Date of Last Rate Operating Operating Rate Base Debt/ Meters at Jurisdiction (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing Income Income
Slide 30: Regulatory Summary (continued)
Regulatory Summary (continued) Effective Date of Authorized Requested Authorized Requested Authorized Requested Authorized Requested Requested Date of Last Rate Operating Operating Rate Base Debt/ Meters at Jurisdiction (1) Rate Base Rate of Rate of Return on Return on Debt/Equity Last Rate Filing I
Slide 31: Atmos Pipeline - Texas
Atmos Pipeline - Texas • Atmos Pipeline: Filed 2023 Statement of Intent (SOI) on May 19, 2023 • Requested an increase in annual operating income of $107.4 million • Requested ROE: 13.5%; ROR: 9.73% • Requested capital structure: 40% debt / 60% equity • Requested rate base: $4.3 billion • Test year e
Slide 32: Colorado - Kansas Division
Colorado - Kansas Division • Kansas: Implemented Gas Safety Reliability Surcharge (GSRS) on November 2, 2023 • Approved an increase in annual operating income of $1.8 million • Approved rate base: $16.5 million • Test Year October 2022 through June 2023 • Colorado: Filed System Safety and Integrity
Slide 33: Kentucky/Mid-States Division
Kentucky/Mid-States Division • Kentucky: Implemented Annual PRP on October 1, 2023 • Authorized an annual operating income increase of $2.9 million • Authorized ROE: 9.45%; ROR: 6.94% • Authorized capital structure: 45% debt / 55% equity • Authorized rate base: $40.5 million • Virginia: Implemented
Slide 34: Mid-Tex Division
Mid-Tex Division • Mid-Tex Cities: Implemented Rate Review Mechanism (RRM) on October 1, 2023 • Authorized an increase in annual operating income of $98.6 million • Authorized ROE: 9.80%; ROR: 7.35% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $6.1 billion • Test yea
Slide 35: Mississippi Division
Mississippi Division • Mississippi: Filed Annual System Integrity Rider (SIR) on March 1, 2023 • Requested an increase in annual operating income of $11.0 million • Requested ROR: 7.82% • Requested rate base: $472.7 million • Forward-looking components - PP&E, accumulated depreciation, accumulated d
Slide 36: West Texas Division
West Texas Division • West Texas Cities: Implemented Rate Review Mechanism (RRM) on October 1, 2023 • Authorized an increase in annual operating income of $8.6 million • Authorized ROE: 9.80%; ROR: 7.35% • Authorized capital structure: 42% debt / 58% equity • Authorized rate base: $965.3 million • T
Slide 37: Forward Looking Statements
Forward Looking Statements The matters discussed or incorporated by reference in this presentation may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. All statements other than statements of